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When Amazon went public in 1997, the company's
IPO was unusual for several reasons.

First, because many investors were convinced the company was a
joke--an "online bookseller" with "no barrier to entry" that
would quickly go bust. (Oops.)

Second, because Amazon picked as its banker not Morgan
Stanley or Goldman
Sachs but the unheralded "DMG Technology Group," which was
run by the legendary Valley banker Frank
Quattrone. Quattrone had only recently defected to DMG from
Morgan Stanley, and Amazon was one of his first big wins.

Third, because Amazon's founder and CEO Jeff Bezos wrote a frank letter to shareholders
in which he explained Amazon's philosophy, which was (and is)
quite different from the philosophies of most public companies.

Most public companies--with Yahoo being a particularly timely and pathetic
example--are obsessed with appeasing short-term shareholder
demands. This means constantly maximizing profitability and stock
performance for the next quarter and year, rather than focusing
on long-term investments and value creation.

Since the beginning, Amazon has taken exactly the opposite
approach. No matter how much its public shareholders bitched
about all the money it was spending, no matter how often idiot
armchair pundits opined that it "could never make money" and
"would go bankrupt," no matter how much the stock got clobbered
over the short and intermediate term, Amazon focused on the
horizon.

And now, 14 years later, Amazon is the only one of early Internet
leaders that is still thriving.

(AOL, Yahoo, Excite, Lycos, eBay, Netscape, and other 1990s giants have
since collapsed).

Amazon's approach should be a lesson to all companies, not just
Internet companies.

It takes a long time to build sustainable long-term value. It
takes a big long-term vision and obsessive focus on the few
things that really matter (in Amazon's case, customer
satisfaction). It takes a thick skin and the willingness to
ignore the screaming and disgust of shareholders looking for a
quick score (which, because of the intense competition in the
money-management business, means most shareholders).

It takes, in other words, the willingness to refuse to do what
many pundits and CEOs and investors insist that companies have a
duty to do: Deliver "results" (read: stock appreciation) quarter
after quarter, year after year, come hell or high water.

As Warren Buffett has often observed, it is the
market's insistence on ever-improving "quarterly results" that
leads many management teams to make decisions that help profits
(and stock option value) in the short-term and hurt companies in
the long-term. Sometimes these myopic decisions just result
in companies under-investing in promising long-term
opportunities. Sometimes they lead to corner-cutting and brand
damage. And sometimes they lead to fraud.

Amazon has never done that. And that's the primary reason the
company is so dominant today. And it's the reason Amazon
shareholders who bought the stock on the IPO and held onto it
have now earned 140X their money.

Of course, this shouldn't surprise anyone.

14 years ago, when he took Amazon public, Jeff Bezos told
everyone that this is exactly what Amazon was going to do. His
1997 Letter To Shareholders is still a playbook for building a
great company.